Everything I know about cash flows I learned from Gwen Stefani

Should even pop stars plan ahead? No doubt.

By Iana Robitaille

Money has become so common a subject of our favorite songs, most of us now take such lyrics for granted. But beyond Wu-Tang’s apt 1993 elucidation — “Cash Rules Everything Around Me” — there is a slew of financial lessons to be found inside such verses. To kick off this new series, we offer an analysis of Gwen Stefani’s 2004 reggae-pop jam, “Rich Girl.”

Managing Cash Flows and Budgeting

If I was a rich girl
Na-na-na-na-na-na-na-na-na-na-na-na-na-na-na
See, I’d have all the money in the world
If I was a wealthy girl.
No man could test me, impress me
My cash flow would never ever end…

In the chorus, Stefani paints an ideal reality in which she has access to unlimited “cash flow” — certainly the dream for most, but one that would require careful planning and consideration. Holding cash can be risky, and it isn’t the most profitable way to manage your liquidity. Even if Gwen keeps her money in a number of checking and savings accounts, the return on interest from these accounts will be insubstantial compared to what she could gain by investing. Gwen should take stock of her cash needs — regular expenses such as food and bills, as well as an emergency cash reserve — and make sure to balance her checking account each month. Then, she would do well to consider long-term goals and put some of that cash into savings or investments.

Credit

Think what money could bring
I’d buy everything…
No, wouldn’t just have one hood
A Hollywood mansion if I could
Please book me first class to my fancy house in London town.

Stefani goes on to imagine exactly what she could afford if she had “all the money in the world.” Beginning with “everything” and then getting more specific, she makes plans to purchase some real estate. This is good news: it suggests she has interest in making some of the aforementioned, less-liquid investments. But should she rent or buy? Renting is often a less expensive in the short-term, but it would offer Gwen no return on increases in property value. Rent costs also tend to increase with inflation, but her monthly mortgage payments would remain constant. Because she already has a limitless stream of disposable income in this scenario, buying might be Gwen’s best course of action.

Investments

All the riches, baby, won’t mean anything
All the riches, baby, don’t bring what your love can bring…
Your loving is better than gold, I know.

Stefani offers some wisdom in the refrain. Bracketing the figurative here — the value of her companion’s “love” — she is correct in her assertion that gold is of little worth relative to other investments. Investing in “riches” like precious metals and gems may seems like a good way to diversify her portfolio, but such assets are fickle and typically offer low returns. Instead, Gwen might consider alternative investments such as stocks, bonds, or mutual funds. When she later sings, “See Stefani and her L.A.M.B.,” we learn that she ultimately has made such an investment and launched her own clothing line.

Life for Gwen must be sweet, but even a rich girl needs to plan her finances.